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Talking to people this morning about Rhode Island's apparently-successful play to lure Curt Schilling's game start-up, 38 Studios, with a $75 million loan guarantee, one thing emerges: the littlest state is taking a big risk.

"It's almost like Chinese-style industrial policy on Rhode Island's part, trying to create a games and digital media cluster this way," Bussgang said. (Rhode Island's legislature recently permitted the state to guarantee up to $125 million of loans... so $75 mil represents a big chunk of that.)

Of course, Bussgang said, the loan guarantee requires the company to raise money from banks or institutional investors first, perhaps by issuing bonds, with Rhode Island serving as a "backstop" for those investors. In that sense, the state's risk is pretty binary: either it'll have to pony up $75 million if the company fails, or it'll never need to actually cough up that cash. (Here are the details of the deal.)

Of 38 Studios' ambition to employ 450 people in Rhode Island by the end of 2012, Bussgang said actually doing so would be "extraordinary." (The company today has about 70 employees in its Maynard, Massachusetts office.) It'd mean that 38 Studios would grow into the biggest videogame company New England has seen in recent memory (even Turbine Entertainment and Harmonix Music Systems, two of the most successful existing game companies, have employed 300-350 people in their busiest periods.)

Bussgang said he doesn't think Massachusetts made a mistake in not trying to match Rhode Island's incentives.

Even Saul Kaplan, the former head of the Rhode Island Economic Development Corp., seemed surprised by the size of the state's loan guarantee. "I never really contemplated a deal this large," Kaplan said, but instead smaller loan guarantees and investments to get "a portfolio of technology and IT companies based here." Kaplan is now founder and "chief catalyst" of the Business Innovation Factory in Rhode Island.

In the old days of economic development, when a state got involved in assisting companies, Kaplan observes, there would be some hard assets — like a factory or production equipment — that could be sold off if things went south, helping to repay the loan. "In a knowledge-based industry like gaming," Kaplan says, "when these companies go out, there isn't much in the way of assets to liquidate."

"Now the real open question is what will the market demand and penetration look like for these two first games" that 38 develops, Kaplan says.

Interestingly, when I asked Kaplan about a few small Massachusetts tech companies that Rhode Island successfully managed to attract earlier in the decade with incentives, he had trouble recalling their names. Had any of them grown into 100 or 200-person companies? "Probably not," Kaplan admitted.

Dave Schlafman, a media entrepreneur in Watertown, told me he felt it'd be a challenge to hire a couple hundred videogame programmers and designers in Rhode Island. Many big game developers, like Harmonix, hit that same hiring wall even here in Massachusetts, and they're forced to find freelancers or small contract shops in other states.

On Twitter this morning, Angus Davis, founder of the Providence start-up Swipely, said that "since all Mass. VCs passed on [the] deal, I guess it's a great idea for RI taxpayer, right? Meanwhile, state cut Slater VC fund. Dumb."

(The Slater Technology Fund was created by Rhode Island in 1997 to make small investments in early-stage start-ups, and its funding was cut recently.)

Bill Reed, CEO of Demiurge Studios, a game development shop in Cambridge, posted this open letter to Schilling (and his employees) this morning. In it, Reed wrote, "If anyone on the talented 38 Studios team wants to stay in Massachusetts, where we play major-league ball, they're more than welcome to join the team at Demiurge Studios, the state’s soon-to-be largest independent game studio."

Game entrepreneur Jon Radoff says, "If they have a successful MMO launch and wind up being one of the top MMO products out there, then I think it's conceivable" that 38 Studios might employ 450 people in Rhode Island within a few years. [MMO refers to a "massively-multiplayer online" game, which is the second product 38 Studios has in development.]

Like many other states and provinces in Canada, Rhode Island "may be getting more aggressive to court the videogame industry because it is an industry that experiences a lot of growth, and can inject a lot into local economies," Radoff said, adding that the trend is "definitely a threat to Massachusetts."

About Scott Kirsner

Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.